Speaker 1: Bloomberg Audio Studios, Podcasts, radio News from.
Speaker 2: The Heart where Innovation of money and power. Collie in
Speaker 2: Silicon Vallet Nbon.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed.
Speaker 4: Luod Love.
Speaker 3: Live from New York. This is Bloomberg Technology.
Speaker 5: Let us get straight to the breaking geopolitical news and
Speaker 5: its market impact. Now, the US has indications that Iran
Speaker 5: is preparing to imminently launch a ballistic missile attack against Israel.
Speaker 5: So all according to a senior White House official, markets
Speaker 5: while seeking out safety, We're down on the S and
Speaker 5: P five hundred more than a percentage point. It was
Speaker 5: a swift move from the headline, but notably, this is
Speaker 5: only the biggest sell of since September sixth, not even
Speaker 5: a month. Nazak one hundred has similar moves to the downside.
Speaker 5: We're seeing money move into oil up three and a
Speaker 5: half percent, worries about the supply side there and a
Speaker 5: tenure yield that crashes down some six basis points. This,
Speaker 5: of course as we see a search for safety, but
Speaker 5: we want to bring you the context. Bloomberg's Kaylee lines
Speaker 5: on the Latest News, we are very pleased to have
Speaker 5: you in New York. We understand that the US is
Speaker 5: actively supporting preparations to defend Israel against the possible attack.
Speaker 6: Yeah, that's right, Caroline, and I would remind everyone that
Speaker 6: the US already has had to act in tandem with
Speaker 6: Israel and other allies, including the UK and Jordan about
Speaker 6: six months ago when Iran launched hundreds of missiles and
Speaker 6: drones at Israel and an attack back in April. Largely
Speaker 6: those were intercepted as it was telegraphed beforehand that they
Speaker 6: were coming. Now, the US intelligence does suggest that iron
Speaker 6: may be preparing to do something similar as it retaliates
Speaker 6: against Israel. This is retaliation that we have been expecting
Speaker 6: for about two months now since Israel took out although
Speaker 6: it did not claim credit for it, Hamas's political leader
Speaker 6: in Tehran over the summer. Uran has yet to hit
Speaker 6: back over that, and there is potentially more for them
Speaker 6: to retaliate against now after Israel just in the last
Speaker 6: week was able to kill the leader of Hamasna san
Speaker 6: has Hassan Asrala of course in Lebanon, and has just
Speaker 6: in the last twenty four hours launched a ground incursion
Speaker 6: into Lebanon and what they're calling targeted operations. But that
Speaker 6: is the kind of behavior that the US and others
Speaker 6: have been warning could be seen as escalatory as everyone
Speaker 6: is trying to fend off a wider regional war in
Speaker 6: the Middle East, but still Israel is moving into Lebanon
Speaker 6: as we speak. And Hesbela, of course, one of the
Speaker 6: most powerful, if not the most powerful, Iranian proxy, has
Speaker 6: been seriously weakened by Israeli activity over the last several weeks,
Speaker 6: not just with the killing of Nostralla, but also of
Speaker 6: a number of senior commanders, the explosions of pagers and
Speaker 6: walkie talkies in recent weeks that has limited their ability
Speaker 6: to communicate, and the weekend Hesbola could be seen potentially
Speaker 6: as a week in Iran and Iran wanting to show
Speaker 6: could be wanting to show here a force of strength
Speaker 6: in the region, even if it does have the potential
Speaker 6: to draw others more directly into this conflict, including the
Speaker 6: United States, which is yesterday said they're sending thousands of
Speaker 6: more troops and assets into the region.
Speaker 5: You give us a context of the US response, Kanie.
Speaker 5: All of this comes after, of course, what Iran did
Speaker 5: in April. This isn't the first time that we've seen
Speaker 5: them respond but at that time it almost felt as
Speaker 5: though it wasn't as aggressive as it could have been.
Speaker 5: What are you getting in terms of signals now, yeah.
Speaker 3: Caroline, that's absolutely right.
Speaker 6: It was explained to me back in April that Iran
Speaker 6: sent its slowest drones first. Essentially they were trying to
Speaker 6: signal that this attack was coming, and of course that
Speaker 6: enabled the attack to largely be intercepted. It resulted in
Speaker 6: very little damage to Israeli infrastructure. Only one person was
Speaker 6: ultimately killed, So that was escalation that actually was more
Speaker 6: de escalatory than it was escalatory. Israel hit back in
Speaker 6: a relatively my own manner and no tensions were continuing
Speaker 6: to climb from there at that point. The question is
Speaker 6: going to be the size and scope of Iran's response
Speaker 6: this time around. After that original killing of the Hamas
Speaker 6: political leader in t I Ran earlier this summer, many
Speaker 6: Middle East experts I was speaking with were warning that
Speaker 6: Iran might actually want to land a punch this time
Speaker 6: in a way that it didn't back in April due
Speaker 6: to that inn of everything pretty much that they sent over.
Speaker 6: So it's going to be a question of how limited
Speaker 6: in scope Aron chooses to be here as Iran may
Speaker 6: not have direct incentive to escalate this war further put
Speaker 6: its own self into this conflict rather than doing the
Speaker 6: fighting through its proxies as we've been seeing them do
Speaker 6: since October seventh, which is of course now almost a
Speaker 6: full year ago, and of course not wanting to draw
Speaker 6: more direct conflict with the United States either, because when
Speaker 6: American troops get involved, Caroline, that is where thanks get
Speaker 6: a whole lot trickier.
Speaker 5: Bloom Meg's Katie lines, thank you so much for being here. Meanwhile,
Speaker 5: we want to get yet more insight for you now.
Speaker 5: Bloomg's Dan Williams is on the ground Israel's Northern Command
Speaker 5: close to.
Speaker 3: The Lebanese border.
Speaker 5: Now we know that the imminent threat of the attack
Speaker 5: on Israel follows as Kaylie was pointing out, Israeli forces
Speaker 5: moving into southern Lebanon in an escalation of their own
Speaker 5: campaign against Tran backed hezbelah Dan.
Speaker 3: What's the latest on the ground?
Speaker 1: Has now all the Lady publicly moved round forces on
Speaker 1: a fairly large scale, while at the same time revealing
Speaker 1: to the world that since November of last year, it
Speaker 1: has been conducting dozens of small scale commander operations, but
Speaker 1: across that very border in order to prepare for what
Speaker 1: we've seen in the last hours, in order to collect
Speaker 1: intelligence in order to detect and dismantle Hezbeler position at
Speaker 1: e the bod use for a crosswater attack by Asbella
Speaker 1: resembling the October seventh attack by Hamask on his rol.
Speaker 5: From Garsen, Dan Williams on the move for us. Now,
Speaker 5: we so appreciate your time. Now let's get a market
Speaker 5: reaction toward is a very people focused story, geopolitical story,
Speaker 5: and then we will move on to the world of technology.
Speaker 5: Alga portfolio manager on core Corawford is with us. It's
Speaker 5: difficult to respond to breaking news on the day. But
Speaker 5: does any of this vindicate a knee jerk reaction that
Speaker 5: we see in the markets?
Speaker 3: For sure?
Speaker 7: I mean, look, anytime there's uncertainty, it's going to hit
Speaker 7: the market because the ramifications of a war are clearly
Speaker 7: you know, global, widespread and impactful. You know, besides the
Speaker 7: fact that it's very sad, and you know, the market
Speaker 7: reaction is not surprising at all.
Speaker 5: Uncle, when you look at what the biggest point drags
Speaker 5: are on a Nasdaq benchmark, on an S and P benchmark,
Speaker 5: Unsurprisingly they are big tech, but that's largely because they
Speaker 5: are the biggest companies out there, rather than they have
Speaker 5: the most exposure to any geopolitical tensions. But does that
Speaker 5: warrant a desire to pull back on any over focus
Speaker 5: on the Magnificent seven for example?
Speaker 7: You know, I think it's it's clear as the market
Speaker 7: has outflows and people try and sell the market that
Speaker 7: the mag seven are the biggest proportion of the benchmarks
Speaker 7: and the easiest place to take capital from. So it's
Speaker 7: not surprising that they're they're underperforming. Does it give us
Speaker 7: any less conviction in the long term of where these
Speaker 7: businesses are going? It doesn't, and it doesn't really change
Speaker 7: that thesis.
Speaker 5: Talk to about where these businesses are going. Today, we
Speaker 5: have Apple on the downside significantly, not just because of
Speaker 5: the market selling, but because of worries about the sales
Speaker 5: of its iPhone sixteen. A lot of that predicated on
Speaker 5: when it will really intertwine AI into that offering. The
Speaker 5: flip side, Microsoft today is showing off its prowess in
Speaker 5: the area of consumer AI. What is the thesis for
Speaker 5: these names and how much we'll actually start all using
Speaker 5: the artificial intelligence they promise?
Speaker 7: Yeah, so you know, one thing I'd like to remind
Speaker 7: everyone is that AI burst onto the consumer scene only
Speaker 7: twenty two months ago, and we are expecting the leaps
Speaker 7: and bounds we expecting revenue, and you know, the ROI
Speaker 7: inside of twenty two months is probably the fastest expectation
Speaker 7: baked into any company for any technological revolution. And so
Speaker 7: you know, where I think they're going is AI will
Speaker 7: be integrated with everything that we do. And today we
Speaker 7: think of it as a copilot. I think it's really
Speaker 7: a co worker of where we're going to. A personal
Speaker 7: digital assistant is where the consumer AI will go. And
Speaker 7: then one has to really ask for a company like Apple,
Speaker 7: can they actually abstract you away from your phone and
Speaker 7: abstract you away from the app layer and really significantly
Speaker 7: change the business model as they go into a more
Speaker 7: personalized digital assistant type world?
Speaker 3: And what is that worth to Apple?
Speaker 8: Know?
Speaker 3: What is that worth to a consumer?
Speaker 7: I would argue that it's significantly more than worrying about
Speaker 7: a near term product cycle, because you know that software
Speaker 7: based product cycle is coming.
Speaker 5: We have been talking about the AI impact on stocks
Speaker 5: on revenue for twenty two months, even if the consumer
Speaker 5: hasn't embraced it.
Speaker 3: As much as perhaps the market wants to talk about it.
Speaker 5: Where have it we embraced in terms of the stokes
Speaker 5: that will rally that we haven't really seen outperform yet.
Speaker 7: Yeah, I think I think AI is going to go
Speaker 7: through waves. So initially we've looked at the pigs and shovels,
Speaker 7: and it has been Nvidia, the semiconductor companies, and even
Speaker 7: inside the semis.
Speaker 3: It hasn't been all semis.
Speaker 7: There have been a select few and there's been a
Speaker 7: big bifurcation. We've seen it in a select number of industrials,
Speaker 7: those that cater to data center and the changing data center.
Speaker 7: Then we saw it in in electricity with some of
Speaker 7: these nuclear nuclear plays and the utilities and then catching
Speaker 7: on fire.
Speaker 3: And so you know, I.
Speaker 7: Believe the next phase of this is going to come
Speaker 7: in the rest of the data center and also those
Speaker 7: companies that show that by using AI they're in fact
Speaker 7: improving their operating margins. And that's the next phase. Now
Speaker 7: I expect that to come and you know, twenty five
Speaker 7: to twenty six, because still deploying this AI is not
Speaker 7: necessarily flipping on a switch.
Speaker 3: It takes some planning.
Speaker 5: AI is of course disrupting many a vertical. We think
Speaker 5: how it's going to be applied to healthcare, we think
Speaker 5: of how it's going to be applied to finance. I
Speaker 5: go back to our top story of the day and
Speaker 5: geopolitical tensions. How much will it be applied to defense?
Speaker 5: And is that an area that you've been thinking would
Speaker 5: be outperforming not only in a gypolitical instance, but also
Speaker 5: from an AI backing.
Speaker 7: Yeah, it absolutely will that the amount of money that
Speaker 7: will be required to shore up our defenses and that
Speaker 7: will be spent on defense is going to be significant,
Speaker 7: and in part because you know, just like the Industrial
Speaker 7: Revolution and in the late seventeen hundreds kind of change
Speaker 7: the geopolitical landscape for England at that point in time.
Speaker 3: I believe that.
Speaker 7: AI is going to change the geopolitical landscape for whichever
Speaker 7: country is actually wholeheartedly adopted and then also become leaders
Speaker 7: in it, and that can set the chessboard for the
Speaker 7: next fifty years.
Speaker 5: It's been wonderful to have you in the studio today.
Speaker 5: We appreciate you going across the whole gamut of breaking news.
Speaker 3: Unco Crawford ALGA portfolio Manager.
Speaker 5: Now Taiwan closing its two and a half trillion Dollar
Speaker 5: stock market as super typhoon Krathon approaches the island with
Speaker 5: strong winds and heavy rain.
Speaker 3: Now the market will not conduct.
Speaker 5: Securities, currency, or fixed income trading on Wednesday, according to
Speaker 5: statements from its exchanges. Traders are watching for any possible
Speaker 5: disruption from the typhoon, which is likely to hit the
Speaker 5: West coast, home to Taiwan's heavy industry manufacturing, including of course,
Speaker 5: a plant made a.
Speaker 3: Chip making giant TSMC.
Speaker 5: Echo Star announced yesterday that it's selling its video distribution
Speaker 5: business to Direct TV, a merger that the satellite providers
Speaker 5: have flirted with for almost two decades. We caught up
Speaker 5: with Ecosta CEO Hamid Akaban.
Speaker 3: Here's what you have to say.
Speaker 9: The founders was that this business ends up in great
Speaker 9: hands and continue to develop according to their lifelong working
Speaker 9: vision to you know, make it, you know, one of
Speaker 9: the greatest companies that can make and you know, the
Speaker 9: combination of the two companies now will be that company.
Speaker 9: The company that you know is unique in his position
Speaker 9: in the marketplace. So it's bittersuite, you know in a way.
Speaker 9: They see it in you know, great hands. They're coming
Speaker 9: together and being that challenger that Charlie has created over time,
Speaker 9: but it's also letting it go. It's also very difficult.
Speaker 9: So the answer is bittersweet, not really obvious.
Speaker 5: Satellite TV is ultimately in a state of decline.
Speaker 3: Will this be a period of managed to climb for
Speaker 3: the bigger company.
Speaker 9: It's certainly as part of the thesis that you know
Speaker 9: right now. This is not you know at the time
Speaker 9: that it used to be ten or fifteen years ago,
Speaker 9: when the you know, position of these two companies that
Speaker 9: are coming together was unique and was very strong. The
Speaker 9: two companies have lost sixty percent of their subscribers over
Speaker 9: the past since twenty sixteen, They've lost that everyone has
Speaker 9: access to broadband today, whether it be terrestrial or through
Speaker 9: satellite starlink, you know, the direct to a consumer digital
Speaker 9: providers programmers going around these two companies are ten to
Speaker 9: twenty times largely in terms of customer base. So it
Speaker 9: is time for these companies to come together to increase
Speaker 9: their sustainability and ability to negotiate better deals that it
Speaker 9: can pass on to the consumers.
Speaker 5: That was Ekosta CEO Hamid Akavan. Now let's continue this
Speaker 5: PATV measuer. I'm joined by well who Echo Star sold
Speaker 5: Dish to DirecTV. The CEO now joins us, Bill Morrow. Bill,
Speaker 5: welcome to the show. And I ask you this now
Speaker 5: strategy going forward, the combined nineteen million subscribers you now
Speaker 5: have or do you offer them?
Speaker 3: Is it managed to climb?
Speaker 2: Well?
Speaker 10: Thanks Caroline, And actually we're going to offer them something
Speaker 10: that the new kind of competition cannot.
Speaker 2: You think about the volume of.
Speaker 10: Directed consumer subscription type services. These are the Netflix, Amazon, Primes,
Speaker 10: HBO Maxes that are out there. They have a very
Speaker 10: narrow scope of the content that they offer, the way
Speaker 10: in which they can only navigate through their platforms. Consumers
Speaker 10: are left with having to pick and choose multiple subscription
Speaker 10: services and manage this on their own. They're having the
Speaker 10: difficulty to navigate across these different platforms. With a new
Speaker 10: company with DirecTV and Dish, will do is number one.
Speaker 10: It will actually bundle all of those different services together.
Speaker 10: We'll still have a form of linear or time of
Speaker 10: day type programming, but we're going to let the consumer
Speaker 10: pick and choose two or three or four if that's
Speaker 10: what they want. Of these other directed consumer programs. We'll
Speaker 10: wrap a user interface around that. We'll make navigation easy,
Speaker 10: We'll make search and recommendation easy. But equally as important
Speaker 10: to Caroline is that the combined entity with just under
Speaker 10: twenty million subscribers will give us them very neat influence
Speaker 10: on the industry to work with the programmers, to say,
Speaker 10: the days of the past.
Speaker 2: If two hundred and fifty channels are gone.
Speaker 10: Consumers don't want to pay for content that they are
Speaker 10: never going to watch, and the programmers are still kind
Speaker 10: of tied to those old carriage agreements. This influence is
Speaker 10: going to change that it is in the interest of
Speaker 10: the consumers. We think it's in the industry, the programmers
Speaker 10: in the long run, and of course to our company
Speaker 10: as well.
Speaker 11: Bill.
Speaker 5: I can see how you offer from a price perspective,
Speaker 5: and I can also see how ultimately this is about
Speaker 5: slimming down costs.
Speaker 3: But what about growth.
Speaker 5: Do you think you will ever increase that number subscribed
Speaker 5: or is it about just serving the ones you have?
Speaker 10: Well, well, Caroline, we've really studied the market and what
Speaker 10: are the pain points of the current environment that consumers
Speaker 10: feel and again having to manage multiple subscriptions, not knowing
Speaker 10: where your content is. Even the biggest search engines that
Speaker 10: can't keep up when you're looking for a particular season
Speaker 10: or episode of your favorite.
Speaker 2: Series, or a movie that you want to watch.
Speaker 10: We know that the consumers need more than what's available today.
Speaker 10: By combining these two companies having the influence to be
Speaker 10: able to change those carriage agreements, we're going to give
Speaker 10: them thinner, linear bundles of genres that they can pick.
Speaker 2: We'll let them add in and.
Speaker 10: Insert in the s FOD or those directed consumer Netflix
Speaker 10: or Amazon Primetype services and again with a very different
Speaker 10: kind of experience that will allow us to get back
Speaker 10: into a growth situation. Now we need the two companies
Speaker 10: to come together because we are falling fast. You've heard
Speaker 10: this from a number of different industry experts. So this
Speaker 10: buys us some time, gives us the influence to shape
Speaker 10: the industry. That's all about the consumer, and it's going
Speaker 10: to give something to them that they haven't had.
Speaker 3: But do we need more streaming?
Speaker 5: I know that you're thinking about DirecTV stream and Dish TV,
Speaker 5: and ultimately it sounds that we're going back to the
Speaker 5: past by rebundling the things we've already snipped in terms
Speaker 5: of the cord.
Speaker 10: Number of it is that bundle pass is not going
Speaker 10: to service going into the future and That's why we
Speaker 10: believe with a new kind of carriage agreement, it's going
Speaker 10: to allow you, the rest of the consumers, the rest
Speaker 10: of your viewers, to pick and choose the genres of
Speaker 10: their choice and not pay for all the rest of it.
Speaker 10: So it's not as big of a bundle as what
Speaker 10: we've seen in the past, and that's what we've been advocating.
Speaker 10: That was the deal that we struck with Disney. We
Speaker 10: fought so hard for to be able to get let
Speaker 10: the consumers pick what they want to watch and not
Speaker 10: force them to pay for stuff that they'll never tune into.
Speaker 10: And that is our future.
Speaker 5: You have other stakeholders, largely private equity now when it
Speaker 5: comes to TPG, but also the creditors, and a lot
Speaker 5: of this is based upon whether or not the bondholders
Speaker 5: of Dish in particular sign up to this. Do you
Speaker 5: think that will go through? How painful is it to
Speaker 5: take those sorts of haircuts.
Speaker 10: Well, we think the current bondholders of the DBS business
Speaker 10: under Echo Star with Dish are going to have a
Speaker 10: better deal by converting and exchanging into the debt that
Speaker 10: we're offering. We think it'll be better leverage ratios than
Speaker 10: they see today, there's better confidence in terms of this
Speaker 10: business model about looking forward into the future without the
Speaker 10: risk that they might perceive today with that DBS business.
Speaker 10: We also have advocated and explained that while our initial
Speaker 10: leverage ratio will be in the two and a half times,
Speaker 10: that still is better than any other PayTV provider that
Speaker 10: is out in the marketplace today, and within a twelve
Speaker 10: to twenty four month window, we're going to be very
Speaker 10: focused on bringing that leverage ratio down to below two.
Speaker 2: So that's the reason that we believe they're interested.
Speaker 10: In making this exchange, lowering that debt, making sure that
Speaker 10: this M and A deal can happen, and then we
Speaker 10: of course proceed to the FCC and the DOJ for
Speaker 10: the needed regulatory approvals.
Speaker 5: We'd like to keep in touch as you go through
Speaker 5: those approvals. DirecTV CEO Bill Morrow. We really appreciate your time. Now,
Speaker 5: let's get back to the markets, which are under a
Speaker 5: significant pressure from geopolitical news today. Of course, through off
Speaker 5: by one point three percent on the SMPO four hundred.
Speaker 5: It's a large move, but actually the largest since September
Speaker 5: the sixth. We have seen this element of volatility prior
Speaker 5: to this and a's that one hundred off by more
Speaker 5: than two percent though, so big tech feeling the most pain.
Speaker 5: Money moves into Brent crude. Money moves into the haven.
Speaker 5: That is the US tenure will keep you up to
Speaker 5: speed with the moves between Iran and Israel.
Speaker 3: This is BlueBag technology.
Speaker 5: Quick struck check on soft banks ADRs because those equity
Speaker 5: like instruments that are trading here in the United States
Speaker 5: off by eight tenths of a percent, but it had
Speaker 5: been rising and in fact they closed more than three
Speaker 5: percent higher in Japan trading after the Information reported that
Speaker 5: the firm's Vision Fund plans to invest five hundred million
Speaker 5: dollars in open Ai, citing a source.
Speaker 3: This is, of course, as open ai is kicking off
Speaker 3: its developers day to day. Bomberg's Rachel Metz is busy.
Speaker 3: Tell us a little bit more about the investment round.
Speaker 5: Where we stand in terms of the six and a
Speaker 5: half billion dollar raise.
Speaker 12: Yeah, so it is our understanding that that should be
Speaker 12: closing soon. I mean typically it takes some time for
Speaker 12: these rounds to close. I would expect her to close, yeah,
Speaker 12: and the probably, I don't know, soon in the next
Speaker 12: few days, perhaps.
Speaker 5: Okay, Keen I what's happening in the private markets. In
Speaker 5: public they go to their developers today. It will be
Speaker 5: live streamed. What are we going to expect coming for
Speaker 5: developers from open Ai?
Speaker 12: So this is going to be a really different kind
Speaker 12: of developer day than what they held last year. Last
Speaker 12: year was the first one, so it was a big
Speaker 12: splashy day, cool snacks and like stickers, you know, cool
Speaker 12: stuff like that, and it was in San Francisco. At
Speaker 12: this point, they actually have a lot of developers. They
Speaker 12: have three million developers around the world, and they decided
Speaker 12: to turn this into three events, and sadly for people
Speaker 12: like us, it is closed to the media. But they're
Speaker 12: going to have an event in San Francisco's to day,
Speaker 12: and then they're going to have another one in London
Speaker 12: and other one in Singapore. Since we have so many
Speaker 12: developers around the world, they said they want to focus
Speaker 12: on meeting in smaller groups with these people and also
Speaker 12: just communicating with them and tailoring some of their API
Speaker 12: type stuff to them.
Speaker 5: Very briefly, what is the most exciting area developers have
Speaker 5: been leaning into.
Speaker 3: With open Aire.
Speaker 12: The company actually at this point has a really wide
Speaker 12: range of software available to developers. So it's a little
Speaker 12: bit hard to say what specifically they may want to use.
Speaker 12: I mean, the company has things for content moderation, and
Speaker 12: it has in the past had things that like it offers,
Speaker 12: you know, all kinds of chat chat related things. So
Speaker 12: it really just kind of depends like what you're building,
Speaker 12: if you want it for you inside of your company,
Speaker 12: if you want to build it for consumers. So there's
Speaker 12: there's a lot of options there.
Speaker 5: Rachel Metz quite excited to see what you bring us
Speaker 5: a bit later. We appreciate the time. Meanwhile, some breaking
Speaker 5: news this coming from Samsung going to cut thousands of
Speaker 5: jobs as part of a worldwide layoff. Once again, Samsung,
Speaker 5: of course the juggernaut when it comes to chip making,
Speaker 5: when it comes to hardware within phones, currently of course, televisions,
Speaker 5: you name it, electronics giant currently saying that it will
Speaker 5: be cutting thousands of jobs as part of worldwide layoffs.
Speaker 3: We'll bring you more context.
Speaker 5: This is Bloomberg Technology. Welcome back to Bloomberg Technology. I'm
Speaker 5: Caroline Hyde in New York. We get back to these
Speaker 5: markets because we have the breaking geopolitical news that the
Speaker 5: US has indications that Iran is preparing to imminently launch
Speaker 5: a ballistic missile attack against Israel. This so all according
Speaker 5: to a senior White House official. We see the move
Speaker 5: and flight to safety, as we like to call it,
Speaker 5: a three year yield current tenure yield currently at three
Speaker 5: spots seventy two. We're down some six basist points SBO
Speaker 5: five hundred, off five percent points similar moves.
Speaker 3: With then astat one hundred.
Speaker 5: So equities under pressure, particularly big tech as they are
Speaker 5: the biggest points movers. They are the largest market capitalizations.
Speaker 5: Brent crude up more than four percent. Let's weave into
Speaker 5: some of the technology names we need to keep an
Speaker 5: eye on.
Speaker 3: Round Glastelica is with us for more and more. Broadly,
Speaker 3: this is a key risk aversion trade today.
Speaker 11: Yes, absolutely, we are seeing pretty broad based weakness across equities,
Speaker 11: but certainly tech, especially since this is a group that
Speaker 11: has done pretty well this year. It seems like they
Speaker 11: are taking some of the initial profit taking here. Some
Speaker 11: of the bigger moves companies like Apple, Nvidia, chip makers. Broadly,
Speaker 11: all of these are stocks that have been taking a
Speaker 11: bit of a drop today on the geopolitical risk and
Speaker 11: the kind of increased uncertainty surrounding path.
Speaker 5: There are individual names that we want to call out
Speaker 5: because well, there's the Moon music and then there's the
Speaker 5: micro news with Apple falling for example.
Speaker 3: Significantly.
Speaker 5: This on the back of once again anxieties around the
Speaker 5: iPhone sixteen sales. Who's been coming back on that particular
Speaker 5: name where we're worried about in the supply chain as well.
Speaker 11: Yeah, there's been a lot of concern about app or
Speaker 11: there's a lot of focus on the upcoming iPhone, which
Speaker 11: is the one that's going to have AI features. They're
Speaker 11: getting some early reads on demand as you're looking at
Speaker 11: pre orders and lead times and things like that. And
Speaker 11: today we had Barclays come out and kind of, you know,
Speaker 11: it was the latest firm to kind of say, maybe
Speaker 11: demand here isn't that strong as people were kind of
Speaker 11: hoping or expecting. There was a lot of optimism built
Speaker 11: around the idea that the AI iPhone was going to
Speaker 11: lead to this big upgrade supercycle. People still kind of
Speaker 11: expect a pretty strong growth out of the AI iPhone
Speaker 11: over the longer term, but maybe this is going to
Speaker 11: be more of a twenty twenty five story than the
Speaker 11: twenty twenty four story. City also came out today. They're
Speaker 11: lowering their iPhone unit forecast for this year, but raising
Speaker 11: them for next year, kind of saying, once the AI
Speaker 11: features are available, then we might see you know, more
Speaker 11: people looking to upgrade them. But for the moment, you know,
Speaker 11: given how much Apple has been up since April, it
Speaker 11: seems like this is a name that people are you know,
Speaker 11: taking some profits in, especially when you have this sort
Speaker 11: of additional question mark both a geopolit but also the
Speaker 11: iPhone pre order.
Speaker 5: Sales ron pushing us forward when we see these sorts
Speaker 5: of snap moves. Apple is an ongoing narrative, but more
Speaker 5: broadly in the market today, do you expect people hate
Speaker 5: to use the ton of phrase but by the deck.
Speaker 11: That's a great question. And you know, one thing I've
Speaker 11: heard is that people kind of look at big tech
Speaker 11: as a more defensive place in the markets. Not a
Speaker 11: traditional defensive sector, but given strong cash flows, pretty durable
Speaker 11: earnings growth, pretty good revenue growth, pretty positive demand tail winds,
Speaker 11: especially when you consider you know, interests in AI and
Speaker 11: so forth. If people happen always looking to big tech
Speaker 11: as a area to go into in periods of heightened uncertainty,
Speaker 11: they have some save harbor sort of characteristics. Although there
Speaker 11: are some concerns about valuations given how much they moved
Speaker 11: up this year. Would not surprise me if you did
Speaker 11: see people, you know, looking around saying there's a lot
Speaker 11: of uncertainty right now. Tech looks like a place of
Speaker 11: relative certainty, and they're willing to pay up for that.
Speaker 5: We see the S and P five hundred just bouncing
Speaker 5: off its lows round Lostelca.
Speaker 3: Thank you. Now, let's bringin blue mugs.
Speaker 5: Mike Shephard, Now on the latest news when we are
Speaker 5: understanding the US, Mike is actively supporting preparations to defend
Speaker 5: Israel against any possible attack from Iran.
Speaker 3: Can you bring us the latest in Washington.
Speaker 8: Yes, Carolina, It's all happening very fast here today. We
Speaker 8: saw mid this morning a warning from the White House
Speaker 8: that Iran was making preparations to retaliate against Israel with
Speaker 8: a ballistic missile attack that could be imminent. Now, in
Speaker 8: a way, this is reminiscent of the kind of warning
Speaker 8: that we saw in twenty twenty two in February, when
Speaker 8: the US was warning that Russia was preparing to invade Ukraine.
Speaker 8: So the US is sharing some of the intelligence and
Speaker 8: some of the information that it is seeing out there
Speaker 8: in the world, and that typically in the past has
Speaker 8: kept secret, that it's kept under under wraps for the
Speaker 8: sake of sharing with governments, but it is trying to
Speaker 8: show that Tehran, we are watching your next move and
Speaker 8: we are also making preparations to defend Israel, which is
Speaker 8: one of the closest US allies in the Mideast.
Speaker 5: The key to de escalate, not see an escalation, but
Speaker 5: that feeling likely right now.
Speaker 8: Well. The US has been calling for de escalation and
Speaker 8: trying to push Israel and Hamas, another Iran backed terrorist group,
Speaker 8: and Hezbollah as well to try to meet to de
Speaker 8: escalate to defuse this latest round of violence. But it
Speaker 8: has been moving very quickly in neither side. Neither Israel
Speaker 8: nor the Iran back groups are showing any sign of
Speaker 8: being willing to go to the table to try to
Speaker 8: talk this out. And in fact, overnight we saw Israel
Speaker 8: moving forces into southern Lebanon, ground troops into southern Lebanon
Speaker 8: to conduct what it called limited ground operations. So we
Speaker 8: may be in here for a bit and US is
Speaker 8: concerned Israel maybe overreaching.
Speaker 5: Mike, we are the Blueback Technology show, and often we
Speaker 5: associate Israel with its technology. How are we seeing that
Speaker 5: industry affected? Is it far too soon to be talking
Speaker 5: about that in this current instance.
Speaker 8: Well, it's a great question, Caroline, because we see the
Speaker 8: economic impact of conflict in the war in Ukraine. We've
Speaker 8: seen the economic fallout from that, and there is economic
Speaker 8: fallout here. It's early to tell whether businesses are really
Speaker 8: thinking about whether Israel is a good place to be.
Speaker 8: But for the tech sector, Israel is a significant player.
Speaker 8: The Israeli Innovation Authority says that it accounts for as
Speaker 8: much as twenty percent of the nation's economy. Israel has
Speaker 8: a reputation for being an incubator of startups, especially in
Speaker 8: the cybersecurity and fintech areas. So we'll want to see
Speaker 8: how they assess what happens next with Iran over the
Speaker 8: next few days and weeks and months, to see whether
Speaker 8: stability has an impact on their operations in bags.
Speaker 5: Mike Shephard, we thank you, and let's keep talking about
Speaker 5: other economic news here in the United States. The fallout
Speaker 5: from dock workers walking out of every major port on
Speaker 5: the US East and Gulf coasts for.
Speaker 3: The first time in nearly fifty years.
Speaker 5: It's affecting thirty six ports which have the combined capacity
Speaker 5: to handle as much as half of all US trade volumes.
Speaker 5: No Meg, Danny Burger joins US now from New Jersey,
Speaker 5: and the latest is a pushback against automation and a
Speaker 5: desire for higher wages here, Danny, that's.
Speaker 3: Right, Caroline.
Speaker 13: At the moment what we know of what's being offered,
Speaker 13: the two sides are starting to move. They are starting
Speaker 13: to come closer together, so talks are ongoing.
Speaker 3: Still they have not met in the middle. So the
Speaker 3: details of which, yes, you said, wages. The most recent.
Speaker 13: Wage offer from the employers of the dock workers, that
Speaker 13: is the us MX United States Marine Association, late last
Speaker 13: night they said that they were offering a fifty percent
Speaker 13: wage increase. Reports suggest that the dock workers themselves are
Speaker 13: now looking for a sixty one and a half percent
Speaker 13: wage increase. That's coming down from seventy seven. So they
Speaker 13: are inching closer. But Caroline, you are so right. One
Speaker 13: of the last sticking points is still automation. In their
Speaker 13: update last night, when they offered that fifty percent wage increase,
Speaker 13: the employer said that they would keep the current language
Speaker 13: in the contract about automation. Now, the current contract basically
Speaker 13: prevents them from expanding any automation. There's a question as
Speaker 13: to whether that's going to be enough for the dock workers.
Speaker 13: Part of the disagreement started this past summer when it
Speaker 13: seems like a port in Alabama was indeed starting to
Speaker 13: use more automation, and the dock worker said, hey, that's
Speaker 13: violating our contract. We don't want more automation for fear
Speaker 13: that it's going to lose their job. So, yes, Caroline,
Speaker 13: they're starting to inch closer together when it comes to
Speaker 13: the pay number. But is that current language about automation.
Speaker 3: And not That is still a question.
Speaker 5: And to that point, we sold these issues, these disputes
Speaker 5: on the West Coast. We've seen them in all the industries,
Speaker 5: whether it comes to a pushback against AI in Hollywood.
Speaker 5: How ultimately do we see the contracts change? Do we
Speaker 5: see an ability to stop technology moving forward?
Speaker 13: The employers of these dock workers would argue, no, Caroline,
Speaker 13: that it's inevitable. In fact, most docs use this automated technology.
Speaker 13: You could argue that the East Coast is behind in
Speaker 13: this regard. You have both Asia and the main ports
Speaker 13: in Amsterdam. They use the automated technology. Now a lot
Speaker 13: of the employers would point to the fact that they
Speaker 13: still have dock workers there. They're just simply doing different jobs.
Speaker 13: Instead of loading and offloading cargo, they are just working
Speaker 13: in an office remotely. But again the dock workers might argue, Caroline,
Speaker 13: that's all well and good, but you need guarantees. You
Speaker 13: need to make sure that people aren't losing their job
Speaker 13: and that upskilling is taking place, that there are proper
Speaker 13: measures put in place that the folks who are currently
Speaker 13: working can adapt to this new reality. By the way,
Speaker 13: there are studies that show maybe even automation doesn't necessarily
Speaker 13: speed things up. It's not a clear cut thing. So
Speaker 13: at the moment, they still seem to be at loggerheads
Speaker 13: and you know, it's technology. It marches forward. It might
Speaker 13: be a hard tied to put back out to shore.
Speaker 3: Annie Berger, we appreciate you. Thank you.
Speaker 5: Coming up, Microsoft is out with new features to its
Speaker 5: Copilot AI assistant, or on that next, this is blue
Speaker 5: Meg Technology.
Speaker 3: Microsoft.
Speaker 5: It's adding voice and vision features to its consumer focused
Speaker 5: AI assistant.
Speaker 3: This in a bit to really.
Speaker 5: Demonstrate a payoff from a pretty huge investment in artificial intelligence.
Speaker 3: Bluebagstina bas joins us.
Speaker 5: Some more and Diana you've seen it, you've written about it.
Speaker 3: What most excites you about the updates?
Speaker 14: So look, the things that we're seeing there are most
Speaker 14: new really in the form of an update to the
Speaker 14: Copilot consumer app, which is going to start rolling out
Speaker 14: today for there's an iOS.
Speaker 2: Version, there's an Android version.
Speaker 14: They're also starting to chry out on WhatsApp, which is
Speaker 14: new for them, and one of the more interesting things
Speaker 14: that they're adding our vision features that attempt to have
Speaker 14: the AI know what you're looking at when you're looking
Speaker 14: at a web page and then suggests other things you
Speaker 14: might want to do next steps, answer questions, things like that.
Speaker 14: It's an interesting concept, but also a tricky one because
Speaker 14: you have to figure out how to do that while
Speaker 14: maintaining privacy, while maintaining safety, and so what they're doing
Speaker 14: in the original the preview version they're putting out today
Speaker 14: is a bit limited. It's only for certain websites, it's
Speaker 14: not going to save your data once you shut down
Speaker 14: the app, things like that. But in this feature and
Speaker 14: in general, what they're going to have to balance is
Speaker 14: AI that attracts consumer interests by being more personal, by
Speaker 14: being more what a user wants, while at the same
Speaker 14: time not creeping people out, not violating their privacy. I
Speaker 14: talked a little bit to Microsoft's consumer AI chief, moustaf
Speaker 14: A famili amount about this, and you know what he
Speaker 14: really wants in order to attract consumers is kind of
Speaker 14: more emotional, you know, more of an emotional connection.
Speaker 2: But again, that's a balance.
Speaker 5: Dana Bass sets us up perfectly, and we thank you
Speaker 5: because we can talk about this a little bit more
Speaker 5: with Usef Mehdi, his executive vice president and consumer chief
Speaker 5: Marketing officer at Microsoft. That balance is hard. How do
Speaker 5: you not freak people out with how good it is?
Speaker 15: Yeah?
Speaker 4: Absolutely. I think that's one of the interesting things about
Speaker 4: technology now is how we shape it. It's changing quite
Speaker 4: a bit from something that was just sort of ones
Speaker 4: and zeros and answers to now an ongoing conversation with copal,
Speaker 4: your AI companion, where it can help you and support
Speaker 4: you throughout your entire day, across almost anything that you're
Speaker 4: working on.
Speaker 5: Okay, So the enhancements from a vision from a voice perspective,
Speaker 5: Am I going to feel like I'm talking to an agent?
Speaker 5: Am I going to be able to outsource my day?
Speaker 15: Yeah?
Speaker 4: I think we're really moving from what I think of
Speaker 4: as an AI tool to an AI companion, and a
Speaker 4: companion in the sense that you trust it, you feel
Speaker 4: it's more personal. And when you speak to it with
Speaker 4: the new corporal a voice that we're announcing today, it's
Speaker 4: it's so fast, it's very fluent. You can interrupt it.
Speaker 4: This is not like the old Hey Alexa, Hey Siri,
Speaker 4: and you have to wait. This is literally you talk
Speaker 4: to it and it will have a sense of warmth
Speaker 4: and a sense of your energy and personality, so it'll
Speaker 4: match that to you. So if you're nervous about a
Speaker 4: big trip or about a presentation, it'll coach you through.
Speaker 4: If you're excited about, you know, a kid's birthday party,
Speaker 4: but you.
Speaker 3: Need some ideas, it'll help you.
Speaker 4: So that kind of voice and that fluency will really
Speaker 4: change how you use AI.
Speaker 5: Are more people actually using the tools you're building them?
Speaker 4: Yeah, we've seen a lot. So we've seen, you know,
Speaker 4: millions and millions of people now every day slowly using
Speaker 4: it for more examples, for more questions, And that's in
Speaker 4: fact what goes into how we build a product. But
Speaker 4: I think this what we're announcing today with Voice and
Speaker 4: Vision is going to be that unlock that's going to
Speaker 4: make it a novelty to something that's mainstream that we
Speaker 4: use every day.
Speaker 5: And I'm kind of being promised to an unlock everywhere.
Speaker 5: Whether I'm going to just easily integrate it into my
Speaker 5: Apple iPhone, whether I can just go to WhatsApp and
Speaker 5: easily use METROI, whether I'm looking at a whole new
Speaker 5: app and having to download Chatching BT and use it.
Speaker 3: Why use your verse? What is it like in terms
Speaker 3: of competing for consumer time?
Speaker 4: Yeah, no, it's a great point, and our time is
Speaker 4: so busy. I think the difference will be And what's
Speaker 4: going to announce today is, first off, you have an
Speaker 4: AI model that's so much faster, and it really, as
Speaker 4: I said, it understands you and it connects with you
Speaker 4: in a more human way. The second thing the voice,
Speaker 4: the convenience of it. It's one thing it's say, hey,
Speaker 4: we all learned Spanish in high school. We're kind of proficient,
Speaker 4: but we're not fluent. This is fluent where you can
Speaker 4: think and it can act for you if you let
Speaker 4: it give you give it some points and tips, and
Speaker 4: that will really change I think the use case for it.
Speaker 5: But why your version rather than open AI which is
Speaker 5: sort of the underpinning of the technological advancements you're making.
Speaker 4: Yeah, and then there are many great offerings out there.
Speaker 4: What makes ours unique as we tune it a little
Speaker 4: bit so that, as I said, it's going to be
Speaker 4: much more personal, much more convenient. We also weave it
Speaker 4: into all the software you use, so whether it's Outlook,
Speaker 4: and in particular on Windows, we announce a new class
Speaker 4: of PCs we call Copilot plus PCs where it's the
Speaker 4: most advanced AI on it, so you can do things
Speaker 4: like now search your PC with Common Language, which seems
Speaker 4: like you would assault.
Speaker 5: The people are buying those PCs because of the AI
Speaker 5: compact they are.
Speaker 4: They're buying them because they're the fastest PCs out there.
Speaker 4: Now we took the high ground back from a MacBook
Speaker 4: and because of the most advanced AI, and what can
Speaker 4: you do with that AI? Your photos can now go
Speaker 4: to high res. You can search for anything on your device.
Speaker 4: You can recall anything you've ever seen on the device,
Speaker 4: which is a tough thing and a new feature day
Speaker 4: we call click to do. If you see something like
Speaker 4: even on a YouTube video, you can click and say,
Speaker 4: tell me more about that. Maybe I want to buy
Speaker 4: that these are really powerful features.
Speaker 3: Sina just mentioned it.
Speaker 5: She spoke to my staffas Silliman, relatively new at your organization,
Speaker 5: AI CEO. How is that changing the way in which
Speaker 5: Microsoft presents to the consumer.
Speaker 14: Yeah.
Speaker 4: One of the great things about Mustafa is he really
Speaker 4: has this sort of deep history obviously with incredible expertise,
Speaker 4: but also the consumer ethos, and so he's helping, you know,
Speaker 4: change the company in terms of how we shape how
Speaker 4: we build products even so that you really it's kind
Speaker 4: of an interactive way that you products. They're not like
Speaker 4: products we used to build in the past that were
Speaker 4: like ones in zero's calculate this number. It's really how
Speaker 4: do you know, engage with a consumer with an AI
Speaker 4: where you can bring them out, you can prompt with questions,
Speaker 4: you can guide, and we have to learn on that.
Speaker 4: He's bringing that great expertise to.
Speaker 3: The company and you've got to go and market it.
Speaker 3: Thank you, Thank you.
Speaker 5: Hetti, Executive vice president and Consumer Chief Marketing Officer at Microsoft.
Speaker 3: Cerebras.
Speaker 5: It's an AI startup taking on in video and as
Speaker 5: file for an IPO an evaluations as high as eight
Speaker 5: billion dollars, according to Bloomberg Estimates, we want to discuss
Speaker 5: it all the Bloomberg's amy or what's interesting is the
Speaker 5: financials they've disclosed. It's how dependent they are on one
Speaker 5: particular customer.
Speaker 3: Yeah, definitely.
Speaker 15: So G forty two is an Arberdiveei company that owns
Speaker 15: that has accounted for eighty seven percent, which is actually
Speaker 15: four percentage points higher than last year. And it's interesting
Speaker 15: to understand that G two is a company that is
Speaker 15: closely watched by the Department of Security. So it's interesting
Speaker 15: that it's not only about the company's the sales revenue,
Speaker 15: but also it is also an investor in the company.
Speaker 15: That that's why it's very watched. Whether investors will really
Speaker 15: take that too hard is really to be seen.
Speaker 5: Why go public when sales are currently only at one
Speaker 5: hundred and thirty six million dollars, why not wait?
Speaker 3: Be farp even further.
Speaker 15: So, aichipmicking is at a very interesting point in time,
Speaker 15: and it's actually burning a lot of cash, so it
Speaker 15: needs a lot of money it's to actually put into
Speaker 15: development at this point, so it's understandabable that it will
Speaker 15: actually come for cash. Obviously, a lot of tech companies
Speaker 15: want to actually make some kind of revenue be profitable
Speaker 15: before coming. But the fact that this company's cerebras is
Speaker 15: at the competing with a video which has actually had
Speaker 15: a really great run, and even despite the August fifth
Speaker 15: kind of pullback, it's come back up again. So the
Speaker 15: valuation right now is actually pretty good and also is
Speaker 15: what everyone.
Speaker 3: Is looking for. Amyo, keep a cur sye on that IPA.
Speaker 5: Meanwhile, let's check back on those public markets and as
Speaker 5: that one hundred lower investors seeking out some safe havens
Speaker 5: right now amid growing geopolitical.
Speaker 3: Risks as well. Lee is here with us big tech.
Speaker 5: Fools the hardest because they are the most valuable companies
Speaker 5: out there.
Speaker 16: It feels like definitely, And we also have company specific
Speaker 16: news today from Apple to Nvidia. But S and P
Speaker 16: five hundred is now done by more than one percent,
Speaker 16: and that's that almost two percent, And treasuries across the
Speaker 16: curb fell and tier point investors are flocking to safe
Speaker 16: haven assets like gold bitcoin. I know this show loves
Speaker 16: the bitcoin. It's also down and it's back below the
Speaker 16: sixty one thousand level. We have gold climbing to twenty
Speaker 16: six twenty six hundred, and a gage of the US
Speaker 16: dollar strengthened so a lot of news really to their
Speaker 16: jest here, and we also have earlier this morning a
Speaker 16: mixed bag of economic data. We have usism price falling
Speaker 16: by the most since May twenty twenty three, and that's
Speaker 16: as US job openings throws in August, So those two
Speaker 16: are kind of like odds with a lot of data
Speaker 16: indicating that the demand.
Speaker 3: For workers is slowing.
Speaker 16: And on top of that, Caroline, we also have DOC
Speaker 16: workers on strike affecting almost thirty six ports, So there's
Speaker 16: really been a lot of swift in just one day.
Speaker 16: Yesterday Monday, the SMP five hundred hit its forty third record,
Speaker 16: and today you're seeing everything sinking.
Speaker 3: So that is the context, right.
Speaker 5: Yes, we've got Apple down more than three percent, and
Speaker 5: there's some micro news around the iPhone sixteen concerns there,
Speaker 5: but actually we're fooling only the most in September the sixth.
Speaker 3: This is a key concern, a.
Speaker 5: Potential imminent threat from Iran to Israel. But actually the
Speaker 5: knee jeg reaction is relatively limited, would you.
Speaker 16: Say, exactly, because these companies are so big, but also
Speaker 16: the rally has been broadening, so they're not so much
Speaker 16: as macro events anymore. In Video earnings, Apple earnings, or
Speaker 16: even just corporate news, they're not as big of a
Speaker 16: deal because the rally is broadening, a lot of these
Speaker 16: docks are gaining more heft, and geopolitical conflicts and crises
Speaker 16: are really just really center stage right now more than
Speaker 16: big text, So for now they're away from the spotlight
Speaker 16: and it's other issues now. Unfortunately, or and where people
Speaker 16: buy defense stocks.
Speaker 5: We talk a lot about AI and implications within defense,
Speaker 5: but that does seem to be an area of equity outperformance.
Speaker 16: On the day, and surprisingly defense stocks is outperforming, and
Speaker 16: also other stocks related to AI, like industrials or energy,
Speaker 16: so the ailes there is broadening to its other piers.
Speaker 16: So it's really just not the only game in town.
Speaker 16: But you're right, we're seeing that rally gains are broadening,
Speaker 16: and we who knows how to day will end. This
Speaker 16: is just one tweet that started out and then it's
Speaker 16: just domino from there in video currenting off.
Speaker 3: By three and a half percent.
Speaker 5: Of course, with its ultimate Maco capitalization, that is a
Speaker 5: huge move for the rest of the benchmark.
Speaker 3: Bloombergs Isabel Lee.
Speaker 5: We really appreciate the market wrap now that does it
Speaker 5: for this edition of Bloomberg Technology. Do not forget to
Speaker 5: check out our podcast. You can find it on the
Speaker 5: terminal as well as online on Apple, Spotify, and iHeart
Speaker 5: This is bloom Bag Technology